Kodak set to raise less cash in patents auction

Former photography giant Eastman Kodak’s efforts to climb out of bankruptcy may face a difficult road ahead after initial bids for its patents reportedly came in far below the $2.6 billion the company was hoping to get.

The company is trying to save itself from collapse by auctioning off a total of 1,100 patents in order to earn enough money to pay off creditors and have some finances left over to restructure its business.Once the number-one manufacturer of quality products in the photo and printing markets, Kodak will keep the results of the historic auction secret after a bankruptcy judge approved the company’s request not to reveal the bids and results until a winner is announced on August 13, 2012.The first of the two lots will include patents related to capturing and processing images, while the second will offer patents for storing and analyzing images.Apple and Google are said to be among the companies that will be battling over the patents at an auction set for Wednesday, with the initial bids from the two giants ranging from around $150 million to $250 million, according to The Wall Street Journal.

Kodak has initially set the price high hoping to see a fierce fight between the two tech majors, which are trying to outrival each other in a battle over dominance of the lucrative smartphone and tablet markets. A year ago, Google started the bidding for Nortel Networks’ patents at $900 million. However, the bankruptcy auction ended with a higher than expected winning bid of $4.5 billion from a consortium including Apple and Microsoft.

However, if the bids remain low, it will cast a devastating blow to Kodak, whose cassette tape failed to make its way to the digital age. Kodak's patents don't involve core mobile technology and have been heavily licensed, which may limit the enthusiasm from potential buyers.

Meanwhile, top Kodak executives, including CEO Antonio Perez, will still see their bonuses paid if the company gets out of insolvency. The bankruptcy court approved the payments after a hearing on Monday despite the request from a group of Kodak retirees urging the company to put the "ill-timed and premature" bonus repayments on hold until after the patent auction. Kodak says it will pay $4.5 million in incentives to the employees as long as they comply with certain operational and restructuring benchmarks.